After a rollercoaster year, the mortgage market appears poised for a potential rebound in 2024, with experts predicting falling rates and stabilizing house prices. While affordability remains a concern, particularly for first-time buyers, a combination of easing inflation and potentially lower interest rates could bring some relief.
After a rollercoaster year, the mortgage market appears poised for a potential rebound in 2024, with experts predicting falling rates and stabilizing house prices. While affordability remains a concern, particularly for first-time buyers, a combination of easing inflation and potentially lower interest rates could bring some relief.
Rates Below 4% a Possibility: The new year could see some of the most competitive mortgage deals in months, with five-year fixed rates dipping below 4% for the first time since May 2023. This is thanks to a recent drop in UK inflation, which has fueled speculation that the Bank of England could cut interest rates as early as spring.
Choice for Low-Deposit Borrowers
Product options are also improving for those with smaller deposits. As of December 2023, there were over 250 mortgage deals available for borrowers who can only put down 5%, compared to just 144 at the start of the year. This is partly due to the extension of the government's mortgage guarantee scheme, which reduces risk for lenders offering low-deposit loans.
House Prices
Mixed Bag Expected: While a nationwide crash is unlikely, experts predict a fragmented market with price movements varying depending on location and property type. Smaller homes in high-demand areas may see continued rises, while larger, more expensive properties could experience declines, particularly in regions with weaker economies.
First-Time Buyers
A Wait-and-See Game: High house prices combined with historically high interest rates have significantly impacted affordability for first-time buyers. The upcoming March budget could bring some relief in the form of government initiatives, but for now, many may need to wait for further improvement in market conditions before entering the housing market.
Overall, the outlook for 2024 suggests a cautious optimism for the housing market. While challenges remain, particularly for affordability, falling rates and a stabilizing market could provide opportunities for both buyers and sellers.
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